By Colin Brinsden and Economics Correspondent
The steep economic slowdown reduced new infrastructure projects to a trickle in the first three months of the year, propped up only by a major federal government initiative.
Private sector investment in infrastructure and buildings has been a major plank of growth in recent years, but a new report shows that of the $21.4 billion of new projects announced in the March quarter, two-thirds were funded through the government's schools building program.
The $14.7 billion schools project formed part of the government's $42 billion stimulus package announced in February.
"Excluding this federal program (it) yields an extremely weak quarter of investment, and would represent the lowest value of new projects for two years," Access Economics director David Rumbens said.
The independent forecaster's latest Investment Monitor released on Thursday shows there was $223.5 billion of definite investment projects - classified as under construction and committed - at the end of the March quarter.
This was an increase of $11.9 billion over the December quarter and $22 billion higher than a year earlier.
"We do expect that the boost from government investment will eventually be offset by a slide in private sector investment. Overall demand is weak and that will be seen in falling profitability," Mr Rumbens said.
"For many corporates, the fall in profits is still ahead of them. Falling profits will of course detract from corporates' ability to finance and willingness to invest in new projects."
He said some of the projects in the Access Investment Monitor database have been officially labelled "delayed" and may never see the light of day, or not for some considerable time.
The value of projects in planning - under construction or possible - totalled $409.3 billion in the March quarter, an increase of $13.8 billion compared to the previous quarter.
Mining investment, the major stalwart of the boom times, is struggling against a lack of available finance, and the swift fall in commodity prices means there are few new projects appearing.
"It's a similar story broadly across commercial building with the level of definite investment now below that of a year ago led by weakness in retail projects," Mr Rumbens said.
The report says a record year of engineering construction commencements in 2007-08 is still supporting work in NSW, although this will drop away through 2009-10.
The investment agenda is also looking subdued in a Victorian state "on the brink of recession", and while Queensland's investment profile looks much stronger, its "day of reckoning" will still come with lower commodity prices.
Many mining operations are also scaling back production in Western Australia, but Access says there is still plenty of work to be done on new resource projects.
"This will continue through 2009 and 2010, meaning that WA's investment drop will happen more gradually than elsewhere, but it will still be significant," Access said.
However, South Australia is on track to record its lowest share of national engineering construction in 20 years.
"Despite much hype and impressive exploration expenditure, South Australia has now officially missed the boat on the mining boom."
Project investment in Tasmania remains solid given its population base and the Northern Territory continues to "defy gravity" having entered the crisis with considerable economic momentum.
But the ACT is now on the "slippery slope" after too many offices were built in Canberra in recent years.